America Invents Act Creates a Transitional Program for Covered Business Method Patents

Depositphotos_26628667_xs03/20/2013

The America Invents Act (AIA) creates new administrative trial procedures to challenge patentability outside litigation before a district court venue. These trial procedures are namely (1) Post Grant Review (PGR), (2) Inter Partes Review (IPR) and (3) a transitional program for covered business method (CBM) patents. These laws went into effect on September 16, 2012.

This update covers the transitional program for covered business method patents.

A specific post-grant review proceeding for covered business method (CBM) patents was created under Section 18 of the AIA. The program allows a petitioner who has been sued for infringement of a CBM patent to challenge the validity of the patent before the U.S. Patent and Trademark Office (USPTO). It is designed to provide an efficient and systemized alternative to litigation. The transitional program utilizes the same standards and procedures as PGR. The core differences from the latter include requirements for prior art, grounds for standing and timing. New stay and estoppel provisions also contrast from PGR.

AIA defines a CBM as “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration or management of a financial product or service, except that the term does not include patents for technological inventions.”

The Office will interpret the term “financial product or service” by applying a two-step analysis and considering legislative intent and the history behind the public law definition and the transitional program itself. The analysis includes first determining whether the patent claims involve “the practice, administration, or management of a financial product or service” and second whether the patent is directed to a “technological invention.” The decision will be made on a case-by-case basis by the Director of the USPTO, and is not appealable within the USPTO or to the courts of competent jurisdiction.

Only the party who was sued or charged with infringement of a CBM may petition for a CBM review of the patent. Recent USPTO comments suggest this likely includes parties served with cease and desist letters.

Another question is what type of prior art or other invalidating activity raises proper grounds. In fact, the petitioner may challenge a patent on any grounds, including 35 U.S.C. §§ 101 (patentable subject matter), 112 (written description requirements), 102 (novelty destroying prior art), 103 (obviousness in view of such prior art), with the caveat that prior art for challenged patents having an effective filing date prior to March 16, 2013 will be defined by pre-AIA application of §102.

A CBM may be requested at any point other than the period in which a petition for PGR could be filed, namely 9 months following the issuance of the patent. This review applies to all patents, regardless of issue date, though the petition must be filed before this portion of AIA sunsets on September 16, 2020. The final written decision in a CBM review may be appealed to the Federal Circuit.